Union Cabinet on 24 August 2016 approved the signing of an agreement and the protocol between the India and Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.
• The approval will help India in its fight against tax evasion, round tripping and base erosion/profit shifting.
• The approval will replace the existing Double Taxation Avoidance Agreement (DTAA) that was signed between the two nations on 13 June 1994.
• It will align the applicable provisions with the consistent policy followed by India and the revised international standards.
• It will also prevent the abuse of beneficial provisions of the DTAA that can distort financial and real investment flows and create challenges in respect of tax collection.
• It provides for source based taxation of capital gains on transfer of shares, instead of residence based taxation as provided in the existing DTAA.
• The proposed DTAA also enables source based taxation of capital gains from transfer of shares of any company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State.
• It includes a provision for Assistance in Collection of Taxes.
• It also provides for a revised provision for Exchange of Information that would enable the use of information exchanged for other purposes, with the permission of the Competent Authority of the country providing the information.
• It expands the scope of the Permanent Establishments (PE) that enables source based taxation of business income.

The Reserve Bank of India (RBI) on 13 June 2016 issued the guidelines on the Scheme for Sustainable Structuring of Stressed Assets.
The guidelines were issued with an aim to further strengthen the lenders’ ability to deal with stressed assets and to put real assets back on track.
• RBI formulated the Scheme for Sustainable Structuring of Stressed Assets (S4A) as an optional framework for the resolution of large stressed accounts.
• The S4A envisages determination of the sustainable debt level for a stressed borrower.
• It also envisages bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments which are expected to provide upside to the lenders when the borrower turns around.
• In order to make sure that that the entire exercise is carried out in a transparent and prudent manner, S4A envisages that the resolution plan will be prepared by credible professional agencies.
• An Overseeing Committee, set up by the Indian Banks Association, comprising of eminent experts will independently review the processes involved in preparation of the resolution plan for reasonableness and adherence to the provisions of these guidelines.
• The scheme is applicable to those projects that have started commercial operations and have outstanding loan of over 500 crore rupees.
Resolution of large borrowal accounts which are facing severe financial difficulties may require coordinated deep financial restructuring which often involves a substantial write-down of debt and/or making large provisions.